An Opec for solar power isn’t going to work

WHAT do you do in an energy industry that is facing its first speed bumps after decades of meteoric growth? In the case of oil, the answer in 1960 was the formation of a producer’s cartel: the Organization of the Petroleum Exporting Countries, or Opec. Solar power, which is going through its own growing pains this year, is looking to imitate the strategy.

More than 30 Chinese solar power producers signed up to an Opec-style agreement at their industry association’s annual meeting last week, with manufacturers given quotas based on their existing capacity and forecasts of market demand.

That would provide some relief from the conditions seen over the past year, where an excess of production has driven prices for panels and their raw materials well below costs. The crisis has pushed the big four Chinese panelmakers into an expected 7.7 billion yuan (S$1.4 billion) of losses this year.